Dominican financial sector shows strong solvency

Santo Domingo.- The Dominican financial sector is experiencing significant capital inflows, as indicated by Central Bank records. As of March 2024, the regulatory solvency index for financial intermediation entities reached 17.6%, surpassing the minimum requirement of 10% set by the Monetary and Financial Law.

This indicates that the Dominican Republic’s financial system holds surplus assets amounting to RD$174,952 million.

Recent stress tests conducted by the Central Bank to assess the financial strength of the system suggest that these surpluses are sufficient to maintain regulatory solvency above the 10% threshold, even under adverse scenarios where the Dominican economy experiences lower-than-projected real annual growth.

These findings underscore the system’s resilience in simulated economic downturns.

The robust levels of solvency and capitalization within the financial system are largely attributed to the high quality of its credit portfolio, which has a delinquency rate of just 1.3% (1.2% for the multiple banking subsector). From June 2023 to June 2024, the system achieved a net growth of approximately RD$297,000 million, or 17.4%, while maintaining provisions of RD$2.4 for every RD$1 of overdue loans.

This demonstrates that both productive sectors and households are consistently meeting their financial obligations, while the financial system maintains ample reserves to absorb potential credit losses.